Feb 29, 2016 07:49 AM IST | Source: Moneycontrol.com
Macro Economic Survey 2016: GDP growth to remain flat next year; fisc on target
The government today tabled the Economic Survey 2016-17 in Parliament today.
12.56 pm: The NITI Aayog Vice Chairman is discussing a myriad of issues, from the growth outlook and fiscal deficit to bank NPAs and whether the RBI should cut interest rates.
The full interview would be up on Moneycontrol soon. Watch out for it.
12.53 pm: The Economic Survey has shied away from making an 8 percent growth forecast for FY17, saying that it seems "realisable over the medium term".
What explains the subdued expectations? "The outlook for the global economy is more clouded than it was last year [when the Economic Survey was tabled in 2015, which forecast 8 percent growth], explains Panagariya.
12.50 pm: CNBC-TV18 is now talking to Arvind Panagariya, Vice Chairman, NITI Aayog.
12.45 pm: "The informal sector has created jobs and is keeping unemployment low," says the Finance Ministry.
12.40 pm: A word from the Economic Survey on public sector banks, which are precariously positioned at this moment, thanks to the NPA crisis: "Recognition, recapitalization, resolution, and reform needed to resolve twin balance sheet challenge of PSBs and corporate firms."
12.35 pm: While the government will likely meet the fiscal deficit, its own spending space will be constrained -- especially given that rural India needs a lot of help -- so the market can rule out a broadbased stimulus package in the Budget, says HSBC Chief India Economist Pranjul Bhandari.
Bhandari, however, says that she expects one more rate cut to come in soon and adds that the falling bond yields themselves work as a stimulus for corporate India by way of lower borrowing cost.
12.33 pm: "The current account deficit has declined and foreign exchange reserves have risen to USD 351.5 billion in early February 2016," the Finance Ministry tweets.
12.30 pm: Stocks appear to have taken the news of the fiscal deficit target positively. The Bank Nifty has suddenly shot up and is up 1.4 percent.
12.28 pm: "It will be good if the government sticks to its fiscal consolidation path, not just for the next year but also for the medium term," Barclays Chief India Economist Siddhartha Sanyal tells CNBC-TV18. "Tinkering around with medium term targets so frequently will bring down the government's credibility in the eyes of foreign investors."
12.26 pm: The government meeting its fiscal target would be good news for the bond market, where yields have remained stubbornly high of late, and will give the RBI to further cut rates.
Is a rate cut looming right after the Budget?
12.23 pm: The Survey's argument in favour of meeting the fiscal deficit should set to rest speculation over whether the government will miss its target.
Remember, it was the CEA who set the cat among the pigeons by hinting that the government should spend more to counter the economic slowdown, implying it can afford to miss its target.
12.22 pm: The good news. "Credibility and optimality requires the government should meet 3.5 percent fiscal deficit target in FY17," the Survey says.
12.20 pm: "The survey expects continued good performance by industrial, corporate and infrastructure sectors due to recent reforms," the Finance Ministry tweets.
12.16 pm: The Economic Survey also talks about inflation, saying that the increase in wages from the rollout of the 7th Pay Commission will have little impact on prices.
12.14 pm: Below is the government's GDP growth forecast:
12.10 pm: The Survey is a 300-400 page document, authored by the Chief Economic Advisor, currently Arvind Subramanian. It is the government's summary of the current economic situation, the outlook going forward, and is also considered by some as the CEA's wish-list for economic reforms needed going forward.
12.07 pm: The Survey says the government will likely meet its FY16 fiscal deficit target of 3.9 percent. For the next year, there's no number yet (the official target is 3.5 percent). It only says that the government will face a tight fiscal situation.
12.04 pm: The Economic Survey forecasts growth to come in at 7-7.75 percent this year.
"Amidst a gloomy international economic landscape, India stands as a haven of stability," the Finance Ministry tweets.
No news yet on the growth forecast of FY17.
12.00 pm: Welcome to the live coverage of the Economic Survey 2015-16 that the government has tabled in Parliament today.